Michigan Governor Gretchen Whitmer has unveiled her Fiscal Year 2027 executive budget, proposing significant changes to how the state taxes sports betting and online casino operators, with a stated goal of stabilising Medicaid funding and addressing broader fiscal pressures. The plan includes a tiered per‑bet fee on sports wagers, mirroring a model adopted in Illinois, along with a steeper tax on iGaming operators that exceed revenue thresholds.
Under the proposal released this week, the revenue strategy would generate close to $200 million annually if adopted, directing much of that into the Medicaid Benefits Trust Fund, which supports health care services for low‑income residents.
Per‑Wager Fee Targets Betting Volume
A centrepiece of the budget is the introduction of a per‑wager fee on sports betting that applies to every single bet accepted by licensed operators. The system would work as follows:
- Operators would pay $0.25 per wager for the first 20 million bets accepted in a calendar year.
- For wagers beyond 20 million, the fee would increase to $0.50 per bet.
This structure is identical to the per‑bet tax implemented in Illinois, which Michigan analysts are using as a reference point. The proposal is projected to bring in about $38.8 million in new tax revenue in its first fiscal year, according to state budget documents.
Historically, Michigan’s betting industry has been taxed on revenue, not volume, and current rates rank among the lowest nationally. Under the new scheme, volume, not just profit, becomes a key taxable base.
Higher Tax Tier for Online Casinos
In addition to the per‑bet fee, the proposal would alter how online casinos are taxed:
- Operators with annual adjusted gross receipts (AGR) above $185 million would see the top rate rise from 28 % to 36 % on revenue exceeding that threshold.
- The state estimates this higher marginal rate could generate about $135.5 million annually.
By targeting the largest iGaming operators, those that account for a disproportionate share of online casino revenue, Michigan’s budget aims to capture additional fiscal resources without altering rates for smaller operators.
Medicaid Funding and State Priorities
Whitmer’s revenue proposals are tied directly to Medicaid funding challenges, an area of mounting concern due to federal funding shifts and increased health care costs. The per-wager tax and the iGaming levy are among several fiscal tools being considered to close projected budget gaps and safeguard services for vulnerable populations.
Beyond the gambling tax changes, the governor’s executive budget also includes proposals targeting other sectors, but the gaming tax revisions have drawn outsized industry attention due to their potential market impact and precedent‑setting design.
Industry and Marketplace Impacts
If adopted, the per‑bet fee could fundamentally change how operators think about pricing and risk:
- Volume‑sensitive costs: Operators may face higher costs on high‑volume bets, prompting them to adjust pricing, minimum wager amounts, or consumer incentives to maintain margins.
- Pass‑through risks: Experiences in Illinois suggest operators may absorb some costs or pass them onto bettors through fees or different bet structures, a possibility that could affect wagering behaviour.
- Tax base shifts: By including a per‑bet tax in the revenue mix, Michigan would diversify its gambling tax base beyond traditional revenue taxation.
Operators with a large volume of small‑stake bets, often a reliable source of handle, could see their tax liabilities grow disproportionately, especially if they exceed the 20 million wager threshold.
For operators navigating broader regulatory trends, it’s worth noting the rising focus on consumer protection and enforcement across the US. In states like Illinois, lawmakers have reintroduced online casino legislation for 2026, with implications for operators across the region.
Broader Regulatory and Policy Trends
Michigan’s tax proposals come as states nationwide consider how best to use gambling‑related revenues to support public services. Some markets have pursued broad health and social funding via gambling levies, while others are exploring different revenue avenues.
For example, other states are also examining changes in gambling regulation and associated financial impacts. In Missouri, sports betting debuted with $543M in bets, though it generated minimal tax revenue in its initial months, highlighting variations in how states balance growth and fiscal objectives.
In contrast, markets with modest tax rates, like Missouri’s early sports betting rollout, have seen significant handle with minimal tax revenue initially collected, highlighting variations in how states balance growth and fiscal objectives.
Legislative Outlook and Stakeholder Reception
The per‑bet and iGaming tax proposals are part of an $88.1 billion FY27 budget outlined by the governor and must still be approved by the Republican‑controlled Michigan House and Democratic Senate. Early responses from policymakers suggest debate ahead, with some legislators expressing concern about new tax burdens, particularly given broader economic pressures.
Opposition voices in Lansing have already signalled resistance to broad tax increases, setting the stage for negotiation as lawmakers balance revenue needs against industry competitiveness and consumer costs.
As Michigan lawmakers begin budget discussions, the spectre of a per‑bet model and higher iGaming taxes places the state in a new cohort considering unconventional gambling tax mechanisms and potentially reshaping how gaming is taxed in the Midwest moving forward.